MAJOR AMENDMENT IN THE UAE TAX LITIGATION
Latest UAE tax news major amendment in the UAE tax litigation.
The UAE Federal Supreme Court passed its judgement on 14th October 2020 on appeal filed by UAE Federal Tax Authority (FTA) in relation to Court’s appeal regarding the imposition on penalties resulting from Voluntary disclosure.
UAE Supreme Court decided the following changes: –
Late payment penalties should also apply to voluntary disclosures i.e. up to 300% on tax dues.
Now, late payment penalties apply not from the date of voluntary disclosure but from the due date itself. For Example, A person discovers a mistake in his tax return from January 2018, and makes a voluntary disclosure in January 2020, the penalty for the late payment will be calculated from January 2018.
The Voluntary disclosure results in the FTA applying a percentage-based penalty of 5 % calculated based on the tax amount difference between the value in the voluntary disclosure and the original tax return, tax assessment or tax refund.
FTA applies a late payment penalty to voluntary disclosure:
- Immediately – 2%
- After the first week – 4%
- 1% daily up to maximum of 300%
- The judgement may affect the upcoming future decisions to be issued by various tax dispute committees and Federal Courts.
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